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Pacira Bids to Acquire Flexion to Expand Leadership Position in Non-Opioid Pain Management

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Flexion Therapeutics Inc. shares traded 60% higher after the company reported it entered into a definitive agreement to be acquired by Pacira BioSciences Inc. for $8.00 per share in cash plus an additional non-tradeable contingent value right worth up to $8.00 per share in cash if five specific milestones are met.

Commercial-stage biopharmaceutical company Flexion Therapeutics Inc. (FLXN:NASDAQ), which is engaged in developing and marketing local therapies for the treatment of patients with osteoarthritis (OA) and other musculoskeletal conditions, today announced that it entered into a definitive agreement to be acquired by Pacira BioSciences Inc. (PCRX:NASDAQ), a firm focused on developing and delivering non-opioid pain management and regenerative health solutions.

Under the terms of the agreement, Pacira BioSciences has agreed to pay Flexion Therapeutics shareholders $8.50 per share in cash, along with "one non-tradeable contingent value right (CVR) worth up to $8.00 per share in cash." The company explained that the CVR is conditioned upon meeting several sales and regulatory milestones.

Flexion concentrates it activities on developing local non-opioid therapies for OA, postsurgical pain and lower back pain. The firm stated that its leading product, ZILRETTA® (triamcinolone acetonide extended-release injectable suspension) is the first and only FDA-approved treatment for OA knee pain that utilizes extended-release microsphere technology.

Pacira's Chairman and CEO Dave Stack commented, "This acquisition is a major milestone in our strategy to build a robust offering of novel, non-opioid treatments to improve patient care along the neural pain pathway while simultaneously providing us with a complementary commercial asset in ZILRETTA for the treatment of OA knee pain…We believe the Flexion portfolio further solidifies Pacira as a leader in opioid-sparing pain management as we continue to redefine the role of opioids as a last resort rescue medication. Importantly, this acquisition creates diversification and growth to our topline while providing what we would expect to be meaningful synergies that should result in substantial near- and long-term accretion to our cash flows and earnings."

Flexion's CEO and Co-Founder Michael Clayman, M.D. remarked, "Pacira shares our commitment to advancing non-opioid pain control and we believe it is ideally positioned to drive continued clinical and commercial success of ZILRETTA, FX201, and FX301…This combination with Pacira offers Flexion stakeholders excellent prospects for value creation, particularly as the contingent value rights provide the opportunity to continue to benefit from the ongoing success of Flexion's products and programs."

Pacira's purchase of Flexion will provide it with access to a new innovative non-opioid drug portfolio that is directly and well suited for its objectives of offering opioid alternatives to as many patients as possible to address severe and chronic pain experienced throughout the neural pain pathway. Flexion's non-opioid injection, ZILRETTA, will permit Pacira to deliver treatment to alleviate OA knee pain at much earlier stages in the treatment process.

In addition, the acquisition is expected to benefit Pacira by adding "multiple clinical milestones, including the initiation of a Phase 3 registration trial of ZILRETTA in shoulder osteoarthritis and the advancement of Phase 1 studies of FX201 for musculoskeletal pain, including OA, and FX301 as a lower extremity nerve block for postsurgical pain."

Upon closing, Pacira noted that it will immediately begin receiving additional revenues generated from Flexion's products and which it anticipates will be accretive to full-year 2022 earnings and even higher thereafter.

The companies stated that the acquisition offer has already been unanimously approved by each company's respective Boards of Directors and is expected to close in Q4/21. The firm's noted that the transaction remains subject to approval by Flexion's shareholders, ordinary closing conditions and regulatory approval.

In addition to the $8.50 per share cash offer, Flexion shareholder will receive one non-tradeable CVR as listed above for each common share owned that is all predetermined milestones are achieved would be worth up to another additional $8.00 per share in cash.

The report listed that the milestones which must be met on or before December 31, 2030 and associated payments if realized, are as follows: "$1.00 per share if total calendar year ZILRETTA net sales achieve $250 million; $2.00 per share if total calendar year ZILRETTA net sales achieve $375 million; $3.00 per share if total calendar year ZILRETTA net sales achieve $500 million; $1.00 per share upon U.S. FDA approval of FX201 and $1.00 per share upon U.S. FDA approval of FX301."

Pacira BioSciences is headquartered in Tampa, Fla. and concentrates its efforts on developing and providing non-opioid pain management and regenerative health solutions to patients across the neural pain pathway. The firm's EXPAREL® (bupivacaine liposome injectable suspension), a long-acting local analgesic, was first launched in the U.S. in 2012. The company explained that "EXPAREL® utilizes DepoFoam®, a unique and proprietary product delivery technology that encapsulates drugs without altering their molecular structure and releases them over a desired period of time."

The company listed that it also owns the iovera° system, which it described as "a handheld cryoanalgesia device used to deliver precise, controlled doses of cold temperature only to targeted nerves."

Flexion Therapeutics is a commercial-stage biopharma firm based in Burlington, Mass. that is involved in developing and commercializing novel, local therapies for musculoskeletal conditions and in particular, osteoarthritis (OA), which is the most prevalent form of arthritis. The company advised that "its approved product, ZILRETTA® is the first and only extended-release, intra-articular, or IA (meaning in the joint), injection indicated for the management of OA knee pain."

Flexion Therapeutics started off the day with a market cap of around $290.7 million with approximately 50.3 million shares outstanding and a short interest of about 11.3%. FLXN shares opened 70% higher today at $9.86 (+$4.08, +70.59%) over Friday's $5.78 closing price. The stock has traded today between $9.03 and $9.89 per share and is currently trading at $9.23 (+$3.45, +59.69%).


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